Form 8-K BERKSHIRE HILLS BANCORP For: Jul 22

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 22, 2015

BERKSHIRE HILLS BANCORP, INC.

(Exact Name of Registrant as Specified in its Charter)

Registrant’s telephone number, including area code:        (413) 443-5601

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o                        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o                        Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o                        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02                                           Results of Operations and Financial Condition

On July 22, 2015, Berkshire Hills Bancorp, Inc. (the “Company”), the holding company for Berkshire Bank (the “Bank”), announced its financial results for the quarter ended June 30, 2015.  The news release containing the financial results is included as Exhibit 99.1 and shall not be deemed “filed” for any purpose.

The Company conducted a conference call/webcast on July 23, 2015 to discuss the financial results for the quarter. A telephone replay of the call will be available through Friday, July 31, 2015. The webcast and a copy of management’s script will be available on the Company’s website for an extended period of time.

Item 8.01                                           Other Events

On July 23, 2015, Firestone Financial Corp. (“Firestone”) received shareholder approval to merge Firestone with and into a subsidiary of the Bank. Accordingly, all regulatory and shareholder approvals have been obtained to complete the acquisition of Firestone as a subsidiary of the Bank. The merger is anticipated to close on or about August 7, 2015.

Item 9.01                                           Financial Statements and Exhibits

(a)          Financial Statements of Businesses Acquired.  Not applicable.

(b)          Pro Forma Financial Information.  Not applicable.

(c)           Shell Company Transactions.  Not applicable.

(d)          Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

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Exhibit 99.1

Berkshire Hills Reports 16% Increase in Second Quarter Core EPS; Dividend Declared

PITTSFIELD, MA, July 22, 2015 — Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported $0.51 in core earnings per share in the second quarter of 2015, which was a 16% increase over second quarter results in the prior year.  Profit growth reflects positive operating leverage from ongoing business development.  Second quarter core EPS also increased at an 8% annualized rate compared to the prior quarter.  GAAP EPS totaled $0.35 in the most recent quarter and reflected net non-core charges primarily related to the Hampden Bancorp acquisition, which was completed on April 17.

SECOND QUARTER FINANCIAL HIGHLIGHTS (comparisons are to prior quarter unless otherwise stated):

·              8% annualized increase in core earnings per share

·              13% increase in commercial loans (8% annualized organic)

·              13% increase in deposits (10% annualized organic)

·              14% increase in fee income

·              61.5% efficiency ratio

·              0.05% improvement in core ROA to 0.81% (0.56% GAAP ROA)

·              0.27% non-performing assets/assets

·              0.27% net loan charge-offs/average loans

CEO Michael Daly stated, “We had a good second quarter in organic business development across our regions and business lines.  Commercial loan activity remained strong and deposits grew nicely after the slower winter quarter.  Loan and deposit fee income also advanced and mortgage banking revenues remained elevated.”

“I’m proud of our recent achievements in building Berkshire’s franchise.  The acquisition of Hampden Bancorp was completed in April and was followed by a seamless systems conversion in June.  We announced an agreement to acquire Firestone Financial, a commercial specialty lender in Eastern Massachusetts, and have moved expeditiously towards our goal of completing this attractive acquisition in August.”

Mr. Daly concluded, “The benefit of our positive operating leverage was demonstrated by improvement in our profitability and efficiency metrics in the second quarter.  Our net interest margin continued to improve and is expected to benefit from the planned

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Firestone acquisition in the third quarter.  In addition to improving bottom line results, we introduced Apple Pay™ convenience to our customers, and our employees participated in the biggest Week of Community Service in our Company’s history.   We continue to benefit from heightened recognition in our markets as a preferred partner, combining local focus with strong regional resources.”

DIVIDEND DECLARED

The Board of Directors voted to declare a cash dividend of $0.19 per share to shareholders of record at the close of business on August 6, 2015, payable on August 20, 2015.  This dividend equates to a 2.7% annualized yield based on the $27.92 average closing price of Berkshire’s common stock during the second quarter.

FINANCIAL CONDITION

Total assets increased by $948 million, or 14%, to $7.5 billion in the second quarter.  This includes approximately $700 million added by the Hampden acquisition, which resulted in increases in most categories of assets and liabilities.  Capital ratios improved and were enhanced by the equity issued for this acquisition.  Liquidity ratios improved due to the strong deposit growth during the quarter.

Total commercial loans increased at an 8% organic annualized rate in the second quarter.  This growth reflected ongoing strong originations offset in part by targeted reductions in lower margin accounts.  Total loans grew at a 5% annualized organic rate including mortgage growth less the impact of an ongoing repositioning of the auto loan portfolio.

Asset quality metrics remained favorable.  Annualized net loan charge-offs measured 0.27% of average loans for the quarter.   Quarter-end non-performing assets decreased to 0.27% of total assets and accruing delinquent loans decreased to 0.41% of total loans.  The loan loss allowance measured 0.70% of total loans.  Pursuant to accounting principles, no loan loss allowance was required for the $493 million in acquired Hampden loans, which were 9% of midyear loans.

Annualized organic deposit growth measured 10% in the second quarter, rebounding from slower growth in the winter quarter.  This growth included targeted promotions of money market and time deposits, along with higher brokered balances.  The ratio of loans/deposits was 99% at midyear, compared to 101% at the start of the year.  Total borrowings increased due to acquired Hampden borrowings, as well as approximately $100 million in additional borrowings which were subsequently repaid from excess cash on July 1, 2015.

Midyear tangible book value per share stood at $17.16, and was little changed from $17.19 at the start of the year despite the goodwill recorded for Hampden.  Total book value per share measured $28.02 at midyear. The $9 million accumulated other comprehensive income outstanding at the beginning of the quarter was eliminated due to lower bond prices following the recent rise in long term interest rates.  This noncash

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unrealized change reduced book value per share by approximately $0.32 but had no impact on the Company’s regulatory capital.  The Company issued approximately 4.2 million net shares for the Hampden acquisition.

RESULTS OF OPERATIONS

Most categories of revenue and expense increased in the most recent quarter including the impact of the added operations of Hampden Bancorp as of April 17.  Compared to the prior quarter, total core revenue increased by 16% and total core non-interest expense increased by 11%.  The Hampden acquisition was not estimated to be accretive to core EPS until after most planned cost saves are achieved in the second half of the year.  Including the benefit of the Hampden merger, profitability metrics improved, and Berkshire’s core ROA and core ROE increased compared to the prior quarter and to the second quarter of 2014.  The core return on tangible equity increased to 12.3%.  The second quarter efficiency ratio was 61.5% which was also an improvement over the prior quarter and year over year.  The Company recorded $0.16 per share in net non-core charges in the most recent quarter; these charges were primarily related to Hampden merger costs.  GAAP EPS totaled $0.35 per share including the impact of these charges, and the GAAP ROE was 5.1%.

Net interest income increased by $7.1 million, or 16%, compared to the prior quarter.  The net interest margin improved to 3.30% from 3.18% for these periods.  Net interest income included $2.2 million in purchased loan accretion primarily from recoveries on the collection of credit impaired loans in prior bank acquisitions.  Excluding purchased loan accretion, the margin improved to 3.16% in the most recent quarter compared to 3.15% in the prior quarter, including the benefit of higher loan yields and lower deposit costs.

Fee income increased quarter over quarter by $1.9 million, or 14%.  Fee income included strong organic growth in loan related fees, including revenues on interest rate swaps and seasoned loan sale gains.  Mortgage banking revenues remained elevated due to improved market conditions this year and deposit related fees increased from the slower winter quarter.  Non-core securities gains totaled $2.4 million primarily due to the income recognized on Hampden shares previously owned by Berkshire.

The loan loss provision totaled $4.2 million compared to $3.9 million in the prior quarter and exceeded net charge-offs in each of these quarters.   Core non-interest expense totaled $45.3 million.  At 2.52% of average assets, this ratio was little changed from the prior quarter.  Core non-interest expense growth of $4.6 million included Hampden operating costs, along with higher costs related to the increase in impaired loan recoveries and loan related revenue.  Expense growth also included additional investment in developing fee business lines to support future revenue growth.  GAAP non-interest expense totaled $54.0 million in the second quarter compared to $45.1 million in the prior quarter, including $8.7 million and $4.4 million in non-core expenses in the two periods, respectively.  Total full time equivalent staff increased by 6% to 1,153 including the Hampden team.  With its combined strategies of revenue growth and expense

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management, Berkshire operated with an improved efficiency ratio measuring 61.5% in the most recent quarter.  The Company had 93 ongoing branches as of midyear and in 2015 has consolidated seven branches and entered an agreement to sell its Tennessee branch in the second half of the year.

Berkshire’s income tax rate on core income was 17% in the most recent quarter, compared to 8% in the prior quarter.  This includes the impact of the higher income from the Hampden operations, and the lower proportional benefit of tax-advantaged investments.  Berkshire’s tax rate on GAAP income was 10% in the most recent quarter and reflected the tax benefit related to non-core Hampden merger related charges.

CONFERENCE CALL

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Thursday, July 23, 2015 to discuss the results for the quarter and provide guidance about expected future results. Participants should dial-in to the call 10-15 minutes before it begins. Information about the conference call follows:

A telephone replay of the call will be available through Friday, July 31, 2015. The webcast will be available on Berkshire’s website for an extended period of time.

BACKGROUND

Berkshire Hills Bancorp is the parent of Berkshire Bank — America’s Most Exciting Bank®. Berkshire has $7.5 billion in assets and 93 ongoing full-service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management services.  Berkshire has a pending agreement to acquire Firestone Financial Corp., a commercial specialty finance company with $190 million in assets, located in Needham, Massachusetts.

FORWARD LOOKING STATEMENTS

This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. Berkshire does not undertake any obligation to update forward-looking statements.

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ADDITIONAL INFORMATION FOR STOCKHOLDERS

In connection with the proposed merger with Firestone Financial Corp., Berkshire has filed with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that includes a Proxy Statement of Firestone and a Prospectus of Berkshire, as well as other relevant documents concerning the proposed merger. Investors and stockholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the proposed merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. A free copy of the Registration Statement and Proxy Statement/Prospectus, as well as other filings containing information about Berkshire and Firestone, when they become available, may be obtained at the SEC’s Internet site (www.sec.gov). Copies of the Registration Statement and Proxy Statement/Prospectus and the filings that will be incorporated by reference therein may also be obtained, free of charge, from Berkshire’s website at ir.berkshirebank.com or by contacting Berkshire Investor Relations at 413-236-3149.

PARTICIPANTS IN SOLICITATION

Berkshire and Firestone and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Firestone in connection with the proposed merger. Information about the directors and executive officers of Berkshire is set forth in the proxy statement for Berkshire’s 2015 annual meeting of stockholders, as filed with the SEC on the Schedule 14A on April 1, 2015; in the Form 8-K filed April 28, 2015, and in the Form 8-K filed on May 7, 2015. Information about the directors and executive officers of Firestone is set forth in the Proxy Statement/Prospectus filed with the SEC by Berkshire on Form S-4/A on June 29, 2015.  Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction and a description of their direct and indirect interests, by security holdings or otherwise, may be obtained by reading other relevant documents regarding the proposed merger filed with the SEC, as they become available. Free copies of these documents may be obtained as described in the preceding paragraph.

NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”).  These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition.  They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information.  A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables.  In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.  The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and

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expense.  These measures exclude amounts which the Company views as unrelated to its normalized operations, including securities gains/losses, losses recorded for hedge terminations, merger costs, restructuring costs, systems conversion costs, and out-of-period adjustments.  Non-core adjustments are presented net of an adjustment for income tax expense.  This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income.  The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items.  The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community.  Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, and professional fees.  Systems conversion costs relate primarily to the Company’s core systems conversion and related systems conversions costs.   Restructuring costs primarily consist of costs and losses associated with the disposition of assets.   In the most recent quarter, the Company reported organic growth of loans and deposits, which excluded the balances of accounts acquired in the Hampden acquisition.

CONTACTS

Investor Relations Contact

Allison O’Rourke; Senior Vice President, Investor Relations Officer; 413-236-3149

Media Contact

Elizabeth Mach; Vice President, Marketing Officer; 413-445-8390

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BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-1)

(1) The Company acquired Hampden Bancorp, Inc. (“Hampden”) on April 17, 2015 with total assets of $0.7 billion.

F-1

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-2)

LOAN ANALYSIS

DEPOSIT ANALYSIS

F-2

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-3)

(1)         Merger, restructuring and conversion expenses include Hampden acquisition and branch acquisition related expenses and restructuring expenses.

F-3

BERKSHIRE HILLS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4)

(1) See note on Page F-3

F-4

BERKSHIRE HILLS BANCORP, INC.

ASSET QUALITY ANALYSIS - UNAUDITED - (F-5)